Snack manufacturers respond to shifting demand
Snacking is on the increase around the world, but in developed markets concern is growing that poor snacking habits are contributing to rising levels of child obesity, and pressure is mounting from food authorities and consumer groups… How are snack manufacturers responding? Euromonitor International comments.
Despite being such a common form of snacking around the world, savoury snacks continue to post strong value growth. Globally, they are set to record over 3% growth in 2002, and in the US, already a major snacking market, as high as 5%. In Western Europe, busier lifestyles and less rigid mealtimes are driving sales by over 9% for the year.
However, to sustain this kind of growth manufacturers need to respond to growing concerns about obesity and diet.
Obesity gets high profile coverage
Childhood obesity has become a major problem in developed markets. According to the US Center for Disease Control and Prevention, 15% of American children aged 6-11 are overweight, which is more than twice as many children compared to twenty years ago. The US organisation Partnership for Prevention has furthermore identified that 60% of overweight children aged 5-10 have high blood pressure, a condition which can lead to heart disease later in life.
Reasons for such rising levels of obesity are unhealthy eating habits, compounded by insufficient exercise. According to a survey carried out by the UK's Food Standards Agency, over 90% of children are eating higher amounts of fat than the maximum levels recommended for adults. Television, video and computer games have furthermore resulted in increasingly sedentary lifestyles among children, and have been instrumental in the trend towards snacking in between or even instead of meals.
Fastfood chains have so far been singled out as the main culprits. In the US, court action has been taken against McDonald's, Burger King, KFC and Wendy's, accused of recklessly selling high fat content food. A suit has also been filed on behalf of overweight children.
While such action is unlikely to be successful, it has created stronger consumer awareness about the potentially harmful effects of food, including snacks such as chips and crisps.
Governments get tougher on fatty foods
Governments face major problems as a result of rising obesity levels. Costs for the treatment of obesity-related conditions such as diabetes or heart disease have spiralled, and understandably governments are keen to curb consumption of high fat content food. In the UK, the government is contemplating introducing a 'fat tax' to be imposed on high fat food. Furthermore, schools in some countries have started banning food that is high in fat or sugar levels, including crisps.
Such measures are unlikely to result in immediate shifts in eating habits, but greater education in schools is making children aware of such issues at an age where long-term eating habits are formed - potentially resulting in less receptive attitudes towards snack products in their adult life.
Savoury snacks compete with snack bars
A further concern to savoury snack manufacturers comes in the form of substitutes which concerned parents perceive as healthier than chips and crisps, such as fruit-based snacks or granola bars. Snack bars are the fastest growing sector in the total packaged food market, recording value growth of over 6% globally in 2002.
The UK company Stream Foods focuses entirely on the production of fruit based snacks for children, which are marketed as being 'ideal for lunch boxes'. The company's business has grown rapidly since its launch in 2000, confirming that parents are increasingly looking for healthier alternatives for their children.
Consequently, while savoury snacks continue to grow in popularity, manufacturers are adapting their product offerings to gradually changing consumer preferences.
PepsiCo's Frito-Lay has already announced that it would start producing three of its brands, Doritos, Cheetos and Tostitos, with corn oil instead of trans fat oil - known to increase levels of 'bad' cholesterol - from early 2003. The company also stated that it would launch fat-reduced varieties from December 2002 in the US.
In Italy, Unichips launched a range of fat- and salt-reduced chips during 2002 under the 'Vivalia' brand, through which the company claims to have overcome the problem of relatively poor taste associated with previously launched 'light' varieties.
However, with the introduction of reduced-fat crisps, snack manufacturers have so far mainly focused on the adult market, in response to increasing weight consciousness among women in particular.
Aware of increasing health concerns among consumers, savoury snack manufacturers are also keen to diversify into new snack areas such as snack bars. Through the takeover of Quaker Oats in 2001, Frito-Lay's parent company PepsiCo now owns the world's number one granola bar, Quaker Chewy. The takeover of Quaker Oats also added the Gatorade brand to PepsiCo's product portfolio, allowing the company to diversify into functional drinks to offset declines in cola carbonate demand.
The UK potato crisp manufacturer Golden Wonder also ventured into other snack areas, with the recent launch of Fruitwonders, which consists of strawberry flavour-coated raisins.
Fun and healthy - the key to sustained growth
When marketing snacks to children, the 'fun factor' has always been a key element. Cheetos Mystery Colorz from Frito-Lay - chips which turn the tongue into a mystery colour - are a perfect example of edible entertainment. Attracting children through fun food continues to be a primary concern for savoury snacks manufacturers, and the importance of the health factor has so far been only recognised within the adult market.
As adults are increasingly attracted by savoury snacks marketed as being healthier, they are likely also to opt for healthier varieties for their children, as and when they become more widely available. Consequently, while the fun element will remain crucial, those manufacturers offering products that satisfy children's prevailing desire for snacking and entertainment, without ignoring increasing consumer concern for good nutrition, are likely to enjoy a competitive edge.
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